State attorneys mull SSL lawsuit amendment
Published:Friday | March 1, 2024 | 8:54 AMJovan Johnson/Senior Staff Reporter -
Government lawyers are contemplating whether to amend a lawsuit against Stocks and Securities Limited (SSL) to include a claim that former directors signed a solvency declaration after they had already resigned.
The matter was raised Thursday as attorney from the Attorney General’s Chambers Lisa White, who is representing the Financial Services Commission (FSC), sought the presiding judge’s permission to amplify a witness statement that would have relied on the documents served on the defence the previous day.
But the defence lawyers resisted the move as an effort to “change the case”.
The FSC, which regulates certain financial institutions such as investment houses, sued SSL, the first defendant, on January 23, 2023, alleging that SSL breached several provisions of the FSC Act including appointing a trustee, Caydion Campbell, the second defendant,and applying to wind up the company.
The FSC had issued directions to SSL on January 12, two days after the company reported a multi-billion dollar fraud. The FSC claims the appointment of a trustee violated its directions that the company should not take any action involving the company's assets. It also claims the company was wrong to declare it was solvent.
The trial started on Monday and has heard from three witnesses including the FSC-appointed temporary manager Kenneth Tomlinson whose statement White wanted to use to get the documents admitted in the trial.
Among the documents served on the defence on Wednesday afternoon is a resignation email dated January 12, 2023 for former director Laurence Adamson and a letter of resignation dated January 2, 2023 for Peter Knibb.
They, along with other directors, signed the solvency declaration dated January 15, 2023.
The FSC initially named them defendants but later dropped its case against them as well as SSL founder Hugh Croskery.
“In the ordinary course of things I would raise any issue relating to such documents at the time evidence is being given but this is not an ordinary circumstance,” said King’s Counsel (KC) Carlene Larmond, who is representing SSL as a court-appointed attorney.
The court made the appointment to address any conflicts of interest over the FSC suing an entity for which it has temporary management.
“What these documents are intended to do is to change the case that is before the court. The case before the court as it relates to the declaration of solvency has proceeded on the sole basis that the directors should not have signed because the company was insolvent,” Larmond continued.
She further argued that the FSC sued the company, the trustee and three directors.
“There was no issue raised on the claim, there is nothing joined on a defence as to the authority of the directors to sign that document on the 15th of January 2023.
“What I see from this development last evening is that the shape of the case is intended to be changed to challenge whether they should have signed on the date they signed. …The FSC, as claimant, has proceeded for a year and more on the basis that these men were directors at the time they signed.”
KC Caroline Hay, who is representing the trustee, supported Larmond’s argument.
“I join my friend’s submissions and adopt them with great concern at the timing of the material they disclosed to us and some confusion as to the position seemingly sought to be relied on now in light of the fact that the claim was commenced on the 25th of January on the basis that these three persons; Croskery, Adamson and Knibb were directors,” she said.
White acknowledged that “it is late, to say the least, that this information has been disclosed”.
“It was disclosed as soon as counsel was made aware of it … . We do acknowledge that it has the potential to shift the case as it were,” she added, noting that the new information will ensure that the “court has the best evidence possible to determine the matter”.
Trial judge David Batts denied the application to amplify witness’ statement. But he said an application may be made to amend the claim against SSL and the trustee and he would consider the matter fully at that time.
The trial continues today.